But to provide equal time and to make sure that I am not engaging in my own confirmation bias, consider the chart above. It comes from the other Bianco — David Bianco of Deutsche Bank. It “compares the price-earnings ratio for the Standard & Poor’s 500 Index with this quarter’s average close for the Chicago Board Options Exchange Volatility Index. (The VIX is based on S&P 500 options).

Bianco’s P/E-VIX shows a lack of concern as of August 9th. He noted that “while stocks have room to extend their advance since March 2009, increased volatility is likely to accompany any further gains.”

There you have it: Stocks may rise relative to earnings but we should be prepared for more price swings.